Detroit's Big Three Look to Halt Declining Car Sales

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DETROIT ( -- Look for sweeter new-vehicle incentives this month, especially from Detroit's Big Three.

The auto industry suffered another sales decline in November, off 12% from the same period a year ago but not as precipitous as October 2002's nearly 25% drop. The Big Three's market share slid to 62% in November from 65% for the same month in 2001, according to consultant J.D. Power & Associates.

Under pressure
As a result, Detroit is under "a lot of pressure to increase incentives," said Bob Schnorbus, director at J.D. Power. General Motors Corp.'s share, he said, was at least treading water until the fourth quarter, down just two-tenths of a point year-to-year through November. GM is "going to have a tough time turning that around in December without very aggressive incentives."

Indeed, GM is already offering

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a generous triple-zero enticement (i.e., no money down, no monthly payments for 90 days and no interest charges) in a national TV spot from Interpublic Group of Cos.' McCann-Erickson Worldwide, Troy, Mich. GM is also planning a "holiday event" offer of up to 60 months of triple-zero deals across its sport utility vehicle lineup for qualified buyers and an extra $1,000 cash bonus on 11 other cars and trucks. Ads for the event break Dec. 6.

The average incentive across the industry, including models without deals, declined in September to $1,200 per vehicle from more than $1,400 in late August, Mr. Schnorbus said.

In addition to GM, DaimlerChrysler's Chrysler Group and Ford Motor Co. make up the industry's Big Three.

Monthly declines
In 2002, the industry saw monthly sales drop in January, February, March, June, May and September vs. the same months in 2001 but only by single-digit percentages, according to sibling Automotive News. July and August 2002 sales rose by 12.9% and 17.6%, respectively, compared with the year-ago months.

There are some bright spots: Sport utility vehicles, European and Japanese luxury vehicles and fresh models have remained strong this year. Entry-level SUV sales rose by 9% in the first 11 months of 2002 vs. a year ago, with midsize SUVs up 7% and luxury SUVs rising 7.5%, Mr. Schnorbus said.

Gary Dilts, senior vice president of sales at Chrysler Group, cited the all-new Dodge Ram Heavy Duty pickup as the main reason why brand's truck sales rose by 9% last month vs. a year ago. The pickup is still in launch mode with a national TV spot from Omnicom Group's BBDO Detroit, Troy, Mich.

Stretching ad dollars
The marketer is looking at ways to stretch its ad dollars now and in 2003, he said. "It's not a question of spending more, but spending the same and getting twice the value."

Volvo Cars of North America's first SUV, the XC90, has been well-received since it went on sale in November with 881 units sold, said Victor Doolan, president of the Ford Motor Co. unit. Volvo expects 80% of XC90 buyers to come from competitive brands, with the rest from its own wagon owners. The marketer launched the XC90 in early November with a 60-second spot airing only in theaters. Havas' Euro RSCG MVBMS Partners, New York, handles advertising duties.

While Volvo's November sales rose by 4.1% vs. last year, the brand's 11-month tally slid by 13.6% to 99,216 vehicles, Ford said.

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